Fitch Puts U.S. on "Rating Watch Negative"; Obama Meets with House Democrats; "Rating Watch Negative"; Some States Having Obamacare Success; Iran Talks Nukes with Six World Powers; Star Democrat to be the Next Senator?

Aired October 15, 2013 - 17:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: There have been no decisions about what exactly we will do.

(END VIDEO CLIP)

BLITZER: As the clock ticks steadily toward an unprecedented default, a Senate deal to end the paralyzing gridlock is on hold, as House Republicans struggle to come up with a last ditch alternate plan.

In a new interview just in to THE SITUATION ROOM, President Obama says the speaker, John Boehner, can't control his own caucus and is weakened by extremists within it.

And is the House really going to take the country over a fiscal cliff?

I'll speak with two powerful Congressmen, Democrat Steve Israel and Republican Darrell Issa. They are here to debate.

I'm Wolf Blitzer.

You're in THE SITUATION ROOM.

ANNOUNCER: This is CNN breaking news.

BLITZER: But we begin with breaking news right now. The credit rating agency Fitch, Fitch has placed the United States' AAA long-term foreign and local currency default ratings right now in what they call "rating watch negative." The ratings of all outstanding U.S. sovereign debt securities have also been placed on that status, along with U.S. short-term foreign currency rating procedures.

This is a serious development right now. In 31 hours from now, this country could actually start defaulting on its debt, sending shock waves around the world.

A Senate deal to reopen the government temporarily and raise the debt ceiling is on hold. The House speaker, John Boehner, is warning against a default, but he may not have the votes to pass a tougher counter proposal.

So are both sides digging in right now?

The stakes clearly enormous.

Republican conservatives met in a Mexican restaurant here in Washington last night to plot strategy. House Democrats have just met with the president over at the White House.

Let's begin our coverage this hour with our chief Congressional correspondent, Dana Bash -- Dana, the House Republicans, they came up with their own bill. The White House quickly rejected that one.

I want you to give us the latest, knowing right now that Fitch has just effectively put the U.S. AAA rating on a negative watch list. This is a serious development that presumably will put enormous new pressure on members of Congress.

Now, what House Republicans are planning to do is hold a vote tonight, maybe as soon as the next few hours, on a new proposal, something that they spent all day revising after their initial proposal clearly didn't get enough support within their own Republican Caucus that they presented to this morning.

Let me tell you what it is that they're going to be voting on.

Number one, reopening the government immediately and funding it until December 15th.

So that would be a month earlier than what the Senate had planned.

Also, lifting the debt ceiling and extending that until February 7th.

And then with regard to Obamacare, there are so many discussions about provisions, you know, little things that they could tweak around the edges. What conservatives convinced the House speaker to do is to eliminate all of that and just focus on one thing, and that is to make clear that no federal subsidies will go to members of Congress and their staff, and, also, the president and cabinet members, in order to pay for their health care. So that is really where this bill is limited.

And, again, we could see a vote very shortly tonight.

BLITZER: Do they have the votes to pass it?

BASH: Unclear. In fact, if you look behind me, you can probably see a group of people milling around. Those are reporters standing out of House Speaker John Boehner's office. He has been receiving members of his caucus, even some conservatives -- Steve King just walked in there -- which is a sign that he is still trying to shore up that magic 217 votes.

Now, one of John Boehner's -- a member of his kitchen cabinet, Congressman Devin Nunes, I spoke to him live earlier this afternoon. And I asked him that question.

Here's what his answer was.

(BEGIN VIDEOTAPE)

BASH: This means that you feel confident, or you know that John Boehner feels confident that he now has 270 votes from your Republican Conference to pass this bill tonight?

NUNES: I don't know that we know that we have the bill -- the votes or not. But I think it would be -- it would really show those who are Republicans and those across the country, those that came here to actually govern and make law and actually do something with their voting card versus people who just want to vote no.

(END VIDEO TAPE)

BASH: So it sounded like I said 270 votes. It's 217. That's the magic number to pass.

But, Wolf, I want to play something else for you that Congressman Nunes said to me. It really is indicative of the split within the Republican Party that has grown deeper and wider since the shutdown has begun.

Listen to what he said about his fellow conservatives.

(BEGIN VIDEOTAPE)

BASH: I know you've been very critical of your fellow Republicans, but to say that they're not conservative?

NUNES: Well, it's not -- it's not -- it's not fighting, but conservatives know how to count. You have to be here to actually conserve something. When you go out and tell your constituents that we are going to just shut the government down until we get rid of Obamacare, it's just lunacy, plain and simple.

(END VIDEO TAPE)

BASH: Pretty strong words. But even still, at this hour, the key thing to remember is that John Boehner is still trying to get enough conservatives to vote for this new plan in order for it to pass on the House floor. He might need some Democratic support. Unclear if he's going to get it.

BLITZER: So, what's the status, Dana, of this -- the legislation in the Senate?

What's going on on that side?

BASH: It's on hold. It's completely on hold. Sources in both parties tell us that. And the reason is because they need the House to pass something in order to get over to the Senate for this whole process to be expedited. It is -- I'll spare you the details of the legislative reasons why, but it will be much easier and faster for the Senate to take up what the House passes and change it their way.

And the expectation is that once Harry Reid, the Democratic leader, and Mitch McConnell, the Republican leader, finalize the framework of the plan that we reported on yesterday and they will they will try to replace whatever the House passes and put their stamp on it. And then again, as we've been saying, it will be probably, once again, up to House Speaker John Boehner to decide whether he's going to take it or leave it.

The House thinks that they're saying to the Senate take it or leave it, but they have different ideas there.

So the next 24 or 48 hours are going to be even more critical than what we have seen, obviously, because of the deadline on Thursday, but also because of the toing and froing that is going with warp speed here on Capitol Hill.

BLITZER: Yes. And the next couple hours could be critical in this whole process, as well, Dana.

Stand by.

With Republicans in the House in disarray, still trying to extract some concessions, House Democrats have had a unity session with the president over at the White House.

Let's bring in our White House correspondent, Brianna Keilar -- Brianna, what are you hearing from the president's meeting with the House Democrats?

BRIANNA KEILAR, CNN SENIOR WHITE HOUSE CORRESPONDENT: Wolf, the White House is mum. House Democrats are mum. But this was, obviously, a unity session, as you said. There's been a lot of unity among Democrats, throughout this whole process and they're trying to continue that with this vote that we're expecting tonight in the House.

Harsh words, I'll tell you, from Democrats for Republicans. They said this plan that Speaker Boehner has put forward is a plan for default.

And Minority Leader Nancy Pelosi said even though these negotiations have stalled in the Senate, as you heard Dana talking about there, that a compromise, if not the bill itself, as you also heard Dana say, will need to originate in the Senate.

Here's more of what she said.

(BEGIN VIDEO CLIP) REP. NANCY PELOSI (D-CA), MINORITY LEADER: We're still optimistic that there is a path to lift the debt ceiling in time. We are disappointed that the House Republicans decided to sabotage, or at least delay, what was happening there, but are hopeful that everybody knows that time is of the essence and that if the Republicans in the House want to put up a bill, they should do it soon.

(END VIDEO CLIP)

KEILAR: Now, since it's unclear whether Speaker Boehner has the votes in his Republican Conference to pass this proposal, Wolf, Minority Leader Nancy Pelosi made it clear she is not going to make it easy on him. She said he will have to rely 100 percent on Republican votes.

I asked her if there would be unanimous Democratic support against this bill. She didn't go as far as saying unanimous, Wolf, but she did say there would be very, very strong Democratic support against this Republican proposal.

BLITZER: Brianna, what's the president's message to the speaker right now?

KEILAR: You know, Wolf, his message really is, I think, in a way, it's sort of you will not get concessions from me. He sat down, the president did, late this morning with a number of local anchors. And that was really just it, that even though we see sort of -- I think because the White House is, in a way, in concert with Senate Democrats, where we had seen some negotiations going on and, obviously, there was some give on some Obamacare concessions -- the president doesn't want to be negotiating. He doesn't want to give any of those concessions to House Republicans.

And the other thing that sort of struck me was that he really expressed a lot of frustration with Speaker Boehner and essentially kind of saying that it's pointless for him to negotiate. He said so many times he feels he's brokered deals with the speaker only for the speaker to turn around, go back and talk to his conference and to find out that the speaker isn't really speaking for his conference -- Wolf.

BLITZER: We're getting that videotape from our affiliates, the local interviews with the president.

We'll have that here in THE SITUATION ROOM soon.

Brianna, thanks very much.

Let's get some perspective now from someone who has been there and done that. We're talking about the former House speaker, Newt Gingrich.

He's one of the co-hosts of CNN's new "CROSSFIRE."

First of all, Newt, you saw this Fitch report --

NEWT GINGRICH (R), FORMER SPEAKER OF THE HOUSE, HOST, "CROSSFIRE": Yes. BLITZER: -- the breaking news just coming in. Fitch ratings, highly respected. They placed the United States of America's AAA long-term foreign and local currency issue or default ratings on "ratings watch negative." That doesn't mean they've actually degraded this AAA rating, but they put the U.S. on a watch, a negative watch list, in effect.

It's a pretty serious moment. And it puts a lot of pressure on these members of Congress, do the right thing, extend the debt ceiling, move on, reopen the government right now, because so much is at stake.

GINGRICH: Wolf, why is it it doesn't put a lot of pressure on the president of the United States?

BLITZER: It puts pressure on everyone.

GINGRICH: It doesn't seem to put any pressure on Barack Obama. He spent all morning attacking Republicans again. No negotiating, no sense of getting together, no trying to solve this. The White House --

GINGRICH: A tiny bit. He hasn't even seen what the House is going to pass and they've already said they won't accept it.

BLITZER: Well, if they tie the hands of the secretary of the Treasury and say you can no

Longer use extraordinary measures to deal with these kinds of financial crises, that's a pretty significant demand that the House Republicans --

GINGRICH: Right.

BLITZER: -- if it stays in that legislation.

GINGRICH: If it stays in.

BLITZER: That's a pretty -- would -- would any president --

GINGRICH: But --

BLITZER: -- accept that?

GINGRICH: -- but historically, the way you negotiate is you start with two sides and you try to come together, you don't start with one side saying I won't talk to you.

BLITZER: But they have come together in the Senate.

What's wrong with that?

GINGRICH: I haven't -- I think the Senate bill, frankly, is pretty weak. And I think that --

BLITZER: But if it's good enough for Mitch McConnell and all these Republicans in the Senate --

(LAUGHTER)

BLITZER: -- why isn't it good in --

GINGRICH: Well, first of all (INAUDIBLE) --

BLITZER: -- in order to avoid a default?

GINGRICH: -- you don't know -- you don't know, beyond Mitch McConnell, how many Republicans it's good enough for because they haven't had a vote. They haven't come out and talked about it.

BLITZER: Because I've spoken to a lot of --

GINGRICH: I suspect --

BLITZER: -- to a lot of Republican senators, Johnny Isakson today of Georgia, your home state.

He's a conservative, right?

GINGRICH: Right.

BLITZER: He wants this to go forward.

GINGRICH: Yes.

BLITZER: He thinks it was a blunder --

GINGRICH: Yes.

BLITZER: -- to start linking Obamacare to this whole government shutdown issue.

GINGRICH: So, look, there's no question you have a number of senators who wish this had never happened, would like to get it over. You also have a number of House members who feel very strongly that cutting John Boehner out of this process was a huge mistake and that it's not going to happen that way. And I think they're going to stay with Boehner. And I think the odds are he's going to get 217 votes. And, frankly, at that point, the president of the United States has a decision to make.

Is he really seriously going to say that he has too much pride or too much whatever his strategy is to negotiate with the speaker of the House, if the speaker can, in fact, pass something?

BLITZER: What would happen if the speaker allows this to come up -- and you're a former speaker -- on the House floor, no Democrats support it -- maybe one or two, let's say -- and it fails, it doesn't get --

GINGRICH: Well, then -- then I think --

BLITZER: -- the 217 votes --

GINGRICH: -- then I think he has to accept the Senate compromise.

BLITZER: Then the -- whatever the Senate does --

GINGRICH: Right.

BLITZER: -- he lets that come up for a vote?

GINGRICH: And I think Boehner knows that --

BLITZER: And presumably, if all the Democrats vote for it, you're going to get 20 or 30 or 40 --

GINGRICH: Yes.

BLITZER: -- at least Republicans --

GINGRICH: Right.

BLITZER: -- that the president signs that and then we move on. The crisis will re-emerge --

GINGRICH: Well --

BLITZER: -- in January or February --

GINGRICH: We're not (INAUDIBLE) --

BLITZER: -- or whatever.

GINGRICH: -- we're kicking, once again --

BLITZER: But at --

GINGRICH: -- we are kicking the can down the road.

BLITZER: -- at least you don't have this issue of a default -- of a credit rating which could cost Americans --

GINGRICH: Which will come back up again --

BLITZER: -- a lot of money in terms of their 401(k)s.

GINGRICH: Well, you have a --

BLITZER: It's going to have a serious consequence if, in fact, they actually go ahead --

GINGRICH: Right.

BLITZER: -- and downgrade --

GINGRICH: So let me come -- BLITZER: -- America's credit rating.

GINGRICH: -- so let me come back to what I started with.

BLITZER: Yes?

GINGRICH: So why doesn't President Obamacare about this?

Why --

BLITZER: He does care.

GINGRICH: No, no he doesn't.

BLITZER: Yes, he does.

GINGRICH: We have no evidence he's willing to negotiate.

BLITZER: If a --

GINGRICH: We have no evidence he's willing to sit down and talk. He gives speeches attacking House Republicans. He gives speeches undermining John Boehner. And imagine you were Boehner, just take any list of 12 things that Obama has said about Boehner --

BLITZER: All right --

GINGRICH: Would you be --

BLITZER: -- your prediction --

GINGRICH: -- (INAUDIBLE)?

BLITZER: -- deal or no deal within the next 24 hours?

GINGRICH: A possibility of a deal. I think we'll know better late tonight.

BLITZER: Maybe we'll know at 6:30 p.m. Eastern --

GINGRICH: (INAUDIBLE).

BLITZER: -- in the crossfire.

GINGRICH: That would be good.

BLITZER: -- you're going to be co-hosting "CROSSFIRE" tonight, right?

GINGRICH: That's right.

BLITZER: We'll see you after THE SITUATION ROOM.

Newt Gingrich, thanks very much.

GINGRICH: Thank you.

BLITZER: Up next, polling shows 74 percent of Americans disapprove of the way House Republicans are acting.

So why haven't they changed their approach?

And while a critical Obamacare Web site continues to have major problems, some states are having a much easier time.

What are they doing right?

(COMMERCIAL BREAK)

BLITZER: We've got major breaking news that we're following here in the SITUATION ROOM. Only moments ago, Fitch placed the United States' AAA credit rating on a negative watch list. This is a significant development. They have not yet downgraded the U.S.' AAA credit rating as S&P did in 2011 during this last government shutdown crisis, but Fitch is now saying that because of what's going on, the U.S. now has a rating watch negative.

That's a technical term. Hasn't yet downgraded from AAA, but this will no doubt put enormous political pressure on members of Congress to go ahead and make a deal, extend the nation's debt ceiling, get the government fully operational.

Let's discuss what's going on with our chief political analyst, Gloria Borger and our CNN political commentator, Ryan Lizza, the Washington correspondent for "The New Yorker" magazine. Gloria, this is a big deal. Moody's hasn't done it yet. There are three major financial ratings services, S&P, Fitch and Moody's. Moody's hasn't done anything yet.

S&P did downgrade the U.S. last time. Now, Fitch is warning that unless the Congress and the president get their act together quickly, there could be a downgrading of the U.S. AAA rating which would have enormous financial ramifications for almost everyone watching this broadcast right now.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Exactly. And one can only hope, Wolf, that this puts some pressure on people in Congress to come up with some kind of a deal that they can all swallow, and they better do it pretty quickly. I mean, time is of the essence. House Republicans are in a situation where they can't figure out whether they've got the votes. The Senate is on hold, waiting for the House Republicans to act.

And in the meantime, the global financial community is watching all of this and saying not that the United States can't pay its debt, but that it actually might be refusing to pay its debt. And so, we have this news from Fitch and I'm sure it's reverberating up on the capitol --

BLITZER: I'm sure it is. And what people have to appreciate, Ryan, I know you do, is that if they downgrade the U.S.' AAA credit rating, that means higher interest rates. The U.S. is going to -- that means people out there are going to pay up higher interest rates for their cars, if they take a loan out for a car or their mortgages or so much else. Businesses are going to have higher interest rates. That will trickle down to higher costs for people. It could have a real negative effect on the U.S. economy economic growth, job creation.

RYAN LIZZA, CNN POLITICAL COMMENTATOR: Look, it's like anyone's credit rating like when we apply for a loan or a mortgage, you have a credit rating. And that tells the bank is this person trustworthy to pay their bills. And these rating agencies are saying, we're not confident anymore that the United States is as trustworthy as it used to be to pay its bills.

Think about the implications of that. That is insane. If you remember in 2011 when S&P did this, they said two things. They said one, we're not so sure they've got the long term structural deficit under control, but more importantly, they said the political system in the United States just can't handle these problems anymore, and we're not confident that the U.S. political system can ensure that they won't go into default. And look, they were right, because we're on the precipice of it right now.

BLITZER: It's a good thing they did this, and they always do this after the markets close at 4:00 p.m. eastern. The markets were already down today under gloomy news coming out of Washington, but if they would have done this even earlier, there would have been a significant collapse. What a lot of investors, I'm sure, are hoping right now between now and the reopening of the markets tomorrow morning, there's good news coming out of Washington.

BORGER: Right. But I think as we sit here, John Boehner is -- House Speaker John Boehner is discovering that he has less control over his caucus than he ever thought he had.

LIZZA: Rediscover --

BORGER: Rediscover. He keeps -- and he's got a decision to make right now about what he's willing to do in terms of this debt ceiling. I mean, this is a huge issue. He's got to decide whether his speakership is actually worth this.

LIZZA: And frankly, the plan in the house right now, I mean, it's a plan to take away health benefits from Congressional staffers and members. We're on the precipice of a default and they're debating whether their staff should have health benefits. It's insane.

BLITZER: All right.

BORGER: The whole thing is crazy.

BLITZER: Guys, a lot has been insane that's been going on here in Washington these last few weeks. But we'll continue to watch it. Thanks very much.

It's been exactly now two weeks since the government's Obamacare website has been open for business. Healthcare.gov continues, though, to be plagued with serious problems, but not every state is using that particular website. Our senior medical correspondent, Elizabeth Cohen, has been looking at how some of those states are doing. What are you finding out, Elizabeth?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: You know what, Wolf, some of those states are really doing quite well. We're getting reports that more than 120,000 people in these 16 states that have their own websites, more than 120,000 people have actually gotten new insurance policies. And some states are even giving out some pretty detailed information. So for example, if you look at the state of Maryland, they found that more than 25,000 people have actually created accounts and verified their identity and are now able to go and shop for insurance.

And this last line here is really interesting, Wolf. The most common age of people who gone on this site and done this are between the ages of 25 and 29. So, a lot of people said oh, those young people, they think they're invincible. They're not going to get insurance, but in fact, it turns out that that may not be true, at least, in the state of Maryland.

BLITZER: Is it still the case that the federal government, the Department of Health and Human Services, is not providing any data about how many people are trying to enroll, have enrolled, gone to the website, healthcare.gov?

COHEN: Right. They are not giving us that data. Now, yesterday, a federal official told me hey, we're going to give out some numbers, some data, tomorrow, meaning today, and they're not doing it and they haven't given us a timeline for when they will. But many people are looking for some number, any number that would give us a feeling for how healthcare.gov, the federal site, is performing.

BLITZER: Elizabeth Cohen watching all of this for us as she does every single day. Thank you, Elizabeth.

When we come back, is the House really going to take the country over some sort of fiscal cliff? Two key lawmakers are standing by, one of whom just left the White House where he met with the president. Tweet us your suggested questions, by the way, using #sitroom.

Plus, Iran sits down today for nuclear talks with six world powers, including the United States. Is it another sign tensions may be beginning to thaw? Stand by. You're in the SITUATION ROOM.

(COMMERCIAL BREAK)

BLITZER: Let's get to more on the breaking news we're following right now. The credit rating agency Fitch, Fitch has just put the United States on a rating watch negative. That's a warning. That's not a downgrade from the AAA rating yet, but it's a serious warning and it could be a major foreshadowing of much more serious action if, if that default clock gets down to zero.

CNN's Richard Quest is joining us from New York right now. In 2011, S&P actually downgraded the U.S. credit rating from that AAA status. Now, Fitch is warning it could do so. Moody's has not yet acted. These are serious warning signs that could have enormous ramifications on the U.S. economy, Richard. RICHARD QUEST, CNN INTERNATIONAL BUSINESS CORRESPONDENT: Absolutely. One level, just because this is a crack in the dam, if you like. When you go on a negative ratings watch, this is how Fitch, themselves, describe it. A rating watch indicates there's a heightened probability of a ratings change, and Fitch says that the U.S. will be on this negative watch until probably the end of the first quarter of 2014. That takes us to the end of March of next year. Wolf, it is the reasons why Fitch has put the U.S. on this watch that are so telling.

The sort of things you and I have been talking about every day. Warning, the U.S. could be forced into default, could be forced into delaying payments, calling into question the full faith and credit of the United States lending ability, borrowing ability, calling into question the U.S. dollar, and finally, they're the high risks.

And finally, on the medium risks, they talk about, and this goes right to the heart of what's going on in Washington, and I'm not going to paraphrase because I don't want to be accused of taking political positions here. This is Fitch. The repeated brinkmanship over raising the debt ceiling dents confidence in the effectiveness of the U.S. government and political institutions.

BLITZER: It's a serious, serious warning right there, Richard. Stand by. I'm going to get back to you. One way or another, we're probably in the end game right now over this standoff involving the government shutdown, the debt ceiling. Will it end with a deal or will it end with a default? As the clock keeps ticking and ticking, all eyes right now on the House of Representatives.

Let's bring in two powerful members of that House, Steve Israel of New York. He chairs the Democratic Congressional Campaign Committee. Republican Darrell Issa of California, he chairs the Oversight and Government Reform Committee. Gentlemen, thanks very much for coming in.

This warning from Fitch, Congressman Israel, you just came from a meeting with the president of the United States.

Earlier, Harry Reid, on the Senate floor, he warned there could actually be a downgrading of the U.S. AAA credit rating by tonight. And now Fitch has taken action.

Did it come up in your meeting with the president, that he's worried about this?

REP. STEVE ISRAEL (D), NEW YORK: Well, every American should be worried about this because it hits them in the pocketbook.

And what's really tragic is it's completely avoidable. This was avoidable a week ago, when every single Democrat said that they would vote for a clean reopening of the government and a clean debt ceiling extension. And it was especially avoidable last night, when Mitch McConnell, the Republican leader of the Senate, and Harry Reid, the Democratic leader, got 95 percent of the way toward a deal. And this morning, the House Republican Caucus threw a grenade on that deal, which is now blowing up on our economy, middle class families, pensions and retirees.

BLITZER: You're a businessman. You understand what this means, potentially.

REP. DARRELL ISSA (R), CALIFORNIA: Right.

BLITZER: It's a warning, not a downgrading, by Fitch. S&P did downgrade the U.S. in 2011 because of a similar crisis. But it has enormous ramifications on your constituents in California, the whole country.

ISSA: Look, this brinksmanship has to stop. We not only have to do a CR and a debt increase, but then we have to go to work on the long- term (INAUDIBLE)

BLITZER: Are you ready to

ISSA: -- negotiations.

BLITZER: -- to support a clean -- what they call a clean CR right now, to keep the government operational through December or January or February, extend the debt ceiling, at least until, let's say, February, and avoid -- and throw out all the other extraneous stuff that was attached?

ISSA: There's always been a two part here, Wolf. Republicans have been -- in the House -- have been for a clean CR increase if it meant we began the serious negotiations of the kinds of reforms that need to happen. Entitlements is a shortcut for it. That's what this deal is about right now. That's what the House wants to get, is at least an understanding that we have to start the very day after this vote, which will hopefully be tonight. Start tomorrow. Steve and I could do it just ourselves. We're classmates.

But we have to start looking at the long-term, about the next generation.

Fitch is right, though, the brinksmanship has to stop. And if they don't see, the day after we increase the debt ceiling and fund the government short-term, if they don't see us start working toward that next one and they figure we're going to wait until the eve, then we deserve a -- a write-down.

BLITZER: So you're ready to accept that, the clean CR, but tied to House/Senate conferees getting together to discuss some long-term problems for the U.S., whether entitlement spending, tax reform, those kind of issues?

That were

(CROSSTALK)

BLITZER: -- that's acceptable to you?

ISRAEL: This is -- this is what I find a little frustrating. We're agreeing and yet every time we're prepared to seal the deal, the Republicans find another excuse not to. So let me reiterate to my friend Darrell, we are open to a conversation on anything and everything. We will negotiate whatever they want to negotiate with -- for.

But let's reopen the government and let's extend the debt ceiling. Let's pay the bills that all members of Congress racked up. And then we can negotiate whatever you want, when you want, where you want.

BLITZER: (INAUDIBLE)

ISRAEL: But don't punish the economy.

BLITZER: The last clues we're hearing

(CROSSTALK)

ISSA: -- the president said he

(CROSSTALK)

ISSA: -- wouldn't negotiate.

BLITZER: The House bill -- the House bill, as far as you understand it right now, the Republican House bill, fund the government through December 15th, extend the debt ceiling through February 7th. But as far as Obamacare is strip the benefits that staffers on the Hill would get, as far as Obamacare subsidies or whatever, make them pay more for their health insurance?

UNIDENTIFIED MALE: No

BLITZER: It's all going to real -- depend on that?

Is that what -- what's going on right now?

ISSA: Wolf, I've never been for the federal government being a deadbeat employer. And that's really what happens when -- and my friend was one of them that voted, when they voted to say that the government wouldn't provide health care to members of Congress and their staff in the original Obamacare bill. It was kind of stupid to say that.

But now, it's become a principle that we should all be in Obamacare. It's a failed program, but we should all be in it, including the president and the cabinet.

So do I support the idea that we're either all in it or none of it?

Of course.

I've got to tell you

BLITZER: So this deal could collapse on that

ISSA: No.

BLITZER: -- singular issue?

ISSA: No. I will -- look, I will vote for the deal. But let's understand

BLITZER: You'll vote for a clean CR?

ISSA: I'll vote for a

ISRAEL: But that's not what

(CROSSTALK) ISSA: -- but let's understand that the president wants and is happy -- he signed a bill that said members of Congress and their staff would, quote, "be in Obamacare." He didn't put himself into it.

It's time for him to be in that program, along with the vice president, all the thousands of political appointees.

Now, having said that, the question of subsidy -- and I, look, I'm a wealthy member of Congress. Let me say something.

The American people don't understand that the so-called subsidies with 2.1 million federal workers and their families, over eight million people get, it's no better and no worse.

So do I think that the government should strip out the support for these folks and thus be a deadbeat employer?

No. But if that's what it takes to get the president's attention, great. BLITZER: All right.

ISSA: It's going to have to happen.

BLITZER: Congressman?

ISRAEL: Well, I think the Fitch rating got all of America's attention. And quite honestly, if this is coming down to whether Congressional staffers should get a subsidy or not, look, we -- let's vote on that cleanly. Again, we'll con -- we'll have a conversation with you, Darrell, about those issues and other issues. But to attach that

(CROSSTALK)

ISRAEL: -- to the default of the United States government

ISSA: Now, Steve

(CROSSTALK)

ISSA: -- what's being attached is the president and the cabinet having the same deal you and I have.

ISRAEL: And that's

ISSA: -- whatever that deal is.

ISRAEL: -- that's fair enough.

But is this -- I mean we're going to come down to that as an issue?

The other -- the other concern I have is this. In the bill that was just posted, another poison pill is that the president's authority to take extraordinary measures to fulfill the Fourteenth Amendment and "The Constitution," to pay the bills that Congress racked up, is being taken away from him.

BLITZER: Is that still in the legislation, as far as you know?

ISSA: It's still in the legislation because there's been an abuse of that date and it is Congress' decision

(CROSSTALK)

BLITZER: But you know no president (INAUDIBLE) is going to accept that infringement on the executive branch.

ISSA: It's not an infringement on the executive branch.

BLITZER: If they take away extraordinary measures of the secretary of the Treasury

ISSA: It could do

BLITZER: -- to make sure the U.S. doesn't default?

ISSA: If -- if they want to tell us all the extraordinary measures and put an actual date on it, fine.

ISRAEL: (INAUDIBLE)

ISSA: But that's been a

ISRAEL: (INAUDIBLE).

ISSA: -- that's been a gaming system. It's been a system where they tell the markets they're going to do something in May and then the months go by afterwards, if it's convenient.

The fact is, the amount of debt the country can have should be a hard number and not build up reserves and then take them away.

BLITZER: All right

ISSA: Extraordinary measures

(CROSSTALK)

BLITZER: -- respond.

ISSA: -- gaming the system. ISRAEL: Well, look, you -- you voted seven times to extend the debt ceiling under President Bush. Now, suddenly, you've seen religion. You've seen the light and suddenly you have

ISSA: (INAUDIBLE).

ISRAEL: -- a

(CROSSTALK)

ISRAEL: No. No, actually, I voted -- I -- listen. You know

(CROSSTALK)

ISSA: Our past votes to raise the debt ceiling

ISRAEL: We're not

ISSA: -- we're all in favor of making sure that when we write a check and it gets to the bank, it gets cashed properly.

ISRAEL: But that's not what your caucus is saying. Your caucus is saying that you guys can put stuff on a government credit card -- for example, you support the troops. I support the troops. When you pass appropriations bills to pay for the troops, you've got to pay for them. And every American

ISSA: You're exactly right

ISRAEL: -- understands that.

ISSA: -- Steve. And Steve is right on this. The appropriation runs out on December 15th. The president will be able to continue to spend in an extraordinary way

(CROSSTALK)

ISSA: -- until we

(CROSSTALK)

BLITZER: -- have you always voted to

ISSA: -- until February.

BLITZER: -- raise the debt ceiling?

ISSA: I have.

BLITZER: You've never voted against it?

ISSA: I've never voted against it.

BLITZER: Have you always voted to raise the debt ceiling?

ISRAEL: I voted against it several times BLITZER: Why?

ISRAEL: -- we're now in a situation

BLITZER: During the Bush administration?

ISRAEL: Yes.

BLITZER: But why would you vote against it then and say that the Republicans now can't vote against it

ISRAEL: So

BLITZER: -- if you have that experience?

ISRAEL: Because I was concerned that we continued to pass supplemental appropriations for the war in Iraq without sufficient oversight. And so in that case

BLITZER: But were you afraid

ISRAEL: -- I felt that the president

BLITZER: -- the U.S. would default?

ISRAEL: No, no, I was concerned that we were writing blank checks to -- to fund Iraq. We are

BLITZER: Do you regret those votes?

ISRAEL: -- we are now -- we are now in a situation -- oh, I regret my vote to authorize the use of force in Iraq.

BLITZER: No. But do you regret the vote to not extend the debt ceiling?

ISRAEL: Well, the debt ceiling actually

BLITZER: Because the president voted against

ISRAEL: -- it -- it passed (ph).

BLITZER: -- raising the debt ceiling when he was

(CROSSTALK)

BLITZER: -- a senator in 2006. He says he regrets that vote.

ISRAEL: We are now at a point, today, where you have the ratings agencies who are putting us on a negative alert. We were downgraded last year. And so we are at a time where we've got to stop this. You know, Darrell said it, we've got to stop the brinksmanship.

But my suggestion would be to stop the brinksmanship. We have an opportunity. Here's -- look, we are at that point. We have an opportunity BLITZER: All right.

ISRAEL: -- to pass a clean debt ceiling, pass a clean

BLITZER: The next couple of hours

ISRAEL: -- CR.

BLITZER: -- are going to be critical.

ISRAEL: It's time.

BLITZER: Let's hope you guys can get that act together, because as I've been saying, the stakes are enormous right now.

ISRAEL: Absolutely.

BLITZER: Steve Israel, Darrell Issa, guys, thanks very much.

Just ahead here in our special report at the top of the hour, could it be women to the rescue? We're taking a closer look at the huge role that some of the female lawmakers are playing in this crisis.

(COMMERCIAL BREAK)

BLITZER: A dry ice explosion at Los Angeles International Airport for the second time in two days. We'll have the latest when we come back.

(COMMERCIAL BREAK)

BLITZER: Back to the breaking news in a moment. Serious warning about the U.S. credit rating coming in from Fitch. A warning, negative warning -- not a downgrading of the AAA rating yet, but a serious warning putting enormous pressure on lawmakers right now. Much more on this coming up.

Let's take another look right now at some of the other stories we're on monitoring here in THE SITUATION ROOM. For the second time in two days, dry ice placed in a plastic bottle has exploded at the Los Angeles International Airport. According to a CNN affiliate KCAL, last night's blast occurred inside an employee restroom, inaccessible to nonemployees. No injuries were reported. A similar incident occurred Sunday.

An alleged al Qaeda operative accused in the 1998 U.S. embassy bombings in Kenya and Tanzania pleaded not guilty in a New York City court today to the terror charges brought against him. U.S. Army Delta Force troops seized Abu Anas al-Libi in his native Libya a little more than a week ago. His arrival in this country is reopening the debate over whether international terrorist suspects should be tried in U.S. courts.

Former San Diego mayor Bob Filner has pleaded guilty to felony false imprisonment and two misdemeanor battery charges for his behavior against three women. Under a plea deal with prosecutors, Filner would serve three years probation and undergo treatment. He resigned this summer after 19 women came forward accusing him of offensive behavior.

Just ahead, Iran sits down for nuclear talks with six world powers, including the United States. Is it a sign tensions are thawing? We have details and all the other breaking news after this.

(COMMERCIAL BREAK)

BLITZER: Just ahead in our special report right at the top of the hour, a Senate bill now on hold. A House vote expected tonight. Time quickly running out to fix this crisis.

We're going back to Capitol Hill and the White House. Stand by.

(COMMERCIAL BREAK)

BLITZER: Get back to the crisis in Washington in a few minutes. But there's other important news. Iran's negotiators sat down today representatives of the United States and five other world powers for talks aimed at curbing its nuclear ambitions. This follows a diplomatic charm offensive by Iran's new president, Hasan Rouhani.

Our chief national security correspondent Jim Sciutto is in Geneva, Switzerland. He's got the very latest.

How did it go today, Jim?

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: Well, Wolf, a busy day. Two sessions in the morning and the afternoon and evening bilateral between European and Iranian officials. And the early reads we're getting are positive. U.S. and European diplomats calling the proposal presented by the Iranians useful and serious. A senior U.S. official saying, quote, "For the first time they've had detailed technical discussions."

And that's key because it gets right up to U.S. and European demands coming into these talks. And that is that Iran move beyond the symbolism that we saw in New York, at the General Assembly, to concrete proposals.

Now neither side is giving details of what's inside that Iranian proposal yet, but we do have some early ideas about how they presented it. It was in English. It was a PowerPoint presentation. And the title of that presentation was "Closing Unnecessary Crises, Opening New Horizons." And the Iranian foreign minister in the last 24 hours has given an idea of what Iran's goals are here. He believes there can be a final agreement on Iran's nuclear program with the West within the next year.

And he also believes that his goal here is to convince all sides that no one is here simply to, quote, in his words, "to kill time." And that gets right to one of America's chief concerns, Israel's chief concerns that Iran is just trying to buy time here with these talks to continue towards weaponizing a nuclear weapon.

So that's one of the concerns the Iranians wanted to address early on but U.S. officials have told us from the beginning, Wolf, they've entered these talks clear eyed. So they're going to need to see concrete proposals on a couple of things. One of those being reducing uranium enrichment inside Iran, greater transparency, access to some of these nuclear sites, but also a plan moving forward for even closing some of these nuclear sites. One of them a plutonium heavy water facility.

Those are the things they're going to need to be hearing details about as the discussions continue tomorrow.

We'll be here tomorrow, Wolf, and we'll give you all the details.

BLITZER: We'll check back with you, Jim. Thanks very much.

Jim Sciutto, reporting from Geneva for us. Critically important talks under way.

Coming up in our special report right at the top of the hour. Even if lawmakers do reach a deal in time, isn't another crisis just around the corner? We'll have the very latest.

Plus one of the fastest rising stars in the Democratic Party may soon be on his way here to Washington as the next U.S. senator from New Jersey.

CNN's interview with the Newark mayor, Cory Booker. That's next.

(COMMERCIAL BREAK)

BLITZER: President Obama speaks out about the government shutdown crisis in new interviews you're about to hear. What the president is now saying. That's coming up at the top of the hour.

(COMMERCIAL BREAK)

BLITZER: Just a little more than 24 hours from now one of the Democratic Party's fastest rising stars could be on his way here to Washington as the next U.S. senator from New Jersey.

Our national correspondent Jason Carroll had a chance to sit down with the Newark Mayor Cory Booker just before tomorrow's special Senate election.

(BEGIN VIDEOTAPE)

JASON CARROLL, CNN NATIONAL CORRESPONDENT (voice-over): Newark's mayor, Senate hopeful, Cory Booker is a political star, a guest of late-night talk shows. Almost 1.5 million Twitter followers. "Vogue" called him an urban super hero. He's saved a neighbor from a burning house, rescued an abandoned dog and helped a city dig out from a snowstorm.

CORY BOOKER (D), NEW JERSEY SENATORIAL CANDIDATE: At the end of the day, you've just got to be yourself. And I come from a community where I witness heroism every single day.

CARROLL: The national spotlight has shown brightly on Booker. But critics question if all of it is deserved.

DAVID REDLAWSK, DIRECTOR, RUTGERS-ENGLETON POLL: It think it's that -- most New Jerseyans don't actually know that much about Cory Booker. They know the image. They know the sense of the super mayor.

CARROLL: With your record in terms of violent crime, because the numbers are not where they should be.

BOOKER: Well, first of all, nobody should be satisfied with the urban violence the way it is.

CARROLL: Homicides dropped after Booker's first year in office. Since then, they've increased every year. Booker also cut the city's police department due to the ailing economy.

BOOKER: We were forced to make difficult decisions. We were able to supplement a lot of that from philanthropy, but there's always more you could have done.

CARROLL: Booker's critics say he spent too much time out of town. But supporters give him high marks for using that time to lure millions in investment dollars and businesses to Newark such as Panasonic and Whole Foods.

BOOKER: Hundreds and hundreds of jobs.

CARROLL: Right before that press conference last week, Booker received word his father had lost his battle with Parkinson's disease.

BOOKER: I muscled through the one press conference and then just shut down. And then -- the next day I just -- I wasn't going to be any good.

CARROLL: It's not the first time his personal life has made news. In August, questions about his sexuality after he told the "Washington Post" he didn't care if people thought he was gay. In September Twitter exchanges with a stripper. Last week he said on opponent Steve Lonegan, fire his top adviser after the adviser said that exchange was, "like what a gay guy would say to a stripper."

(On camera): Why do you think that question still keeps coming up about your personal life? About your sexuality?

BOOKER: At the end of the day, I just believe that we should be electing people on the content of their character, the quality of their ideas. Their dedication to their cause, not on who they're dating.

UNIDENTIFIED MALE: He's done numerous things that I can vouch for in the city that's helped my business grow.

BREYA KNIGHT, NEWARK RESIDENT: I feel like the key points that need to be focused on aren't focused on in our city. CARROLL: Booker stands by his record. As for the Senate --

(On camera): When you look in the mirror, what do you see in terms of your --

BOOKER: I see someone that has a shot along with a lot of other great people in Washington to heal our politics.

CARROLL: Did you ever dream of being president?

BOOKER: No. Absolutely not. When people take their eyes off their immediate purpose and get distracted by a position, they're not -- they're not playing 100 percent. So my goal is what's right before me.

(END VIDEOTAPE)

CARROLL: Question if the new senator would be a so-called workhorse or a show horse, Wolf, Booker says when he gets to the Senate, he will get to work -- Wolf.